FCC Votes Unanimously To Launch USF Reform

The FCC Tuesday unanimously approved proposed new rules
reforming parts of the Universal Service Fund, as well as asking for
stakeholder input on how to institute more reforms.

The FCC is transitioning the fund, which has been supporting
traditional phone, to subsidizing broadband in unserved areas, and is taking
steps to reduce abuse of the payments communications providers get for
connecting to each other's networks (intercarrier compensation).

All the commissioners agreed there needs to be reform,
though there remains some disagreement over how it should be done. "This
is our best chance yet to get from here to there with a Universal Service
system that will truly serve the telecommunications needs of twenty-first
century consumers," said Democratic Commissioner Michael Copps.
"It's very likely our last chance for a while, too, because if we can't
bring this home now, with all the preparation and effort and expectation that
has gone into it, we'll be left with a rickety, tottering, last-century system
that did good things for plain old telephone service but hasn't got a shot at
taking us where we need to go in the years ahead. "

Republican Commissioner Robert McDowell expressed some
disappointment that the reforms did not include the "unbridled growth"
of the contribution fact, which has grown from a little over 5% of revenues to
more than 15%. He said that growth needs to be reigned in and, preferably, the
size of the fund reduced.

He said the FCC was taking a piecemeal approach, but that it
was better than none at all.

There will be plenty of opportunity for stakeholders to
weigh in on what they like and don't like about the FCC's proposals, which
according to senior FCC officials include setting a baseline broadband speed in
the definition of an unserved community.

"We applaud the FCC for moving forward on the important task
of reforming the Universal Service Fund, especially the bloated high-cost fund
that sometimes provides government subsidies in communities that already enjoy
robust competition," said the National Cable & Telecommunications
Association in a statement. "Restructuring the Universal Service
Fund so it promotes broadband deployment in truly unserved communities is
critical to accomplishing the national priority of connecting all Americans. We
look forward to working with the FCC to accomplish these goals through today's
rulemaking proceeding."